EU procurement regulations not fit for purpose?

Curse of the EU Public Procurement Rules strikes again with train manufacturer Bombardier announcing 1,400 job losses in Derby today.

Last month, the company lost out to German group Siemens as the preferred bidder to build 1,200 carriages for the route between Bedford and Brighton.

Managers have blamed the decision on EU public procurement rules that discriminate against smaller companies bidding for the work. It's estimated that around 80% of public contracts in the UK are awarded to just a handful of very large companies. With work often going abroad rather than staying locally, the procurement rules are damaging the UK's fragile economic recovery and threatening jobs.

Shadow business secretary John Denham and shadow transport secretary Maria Eagle have written to Prime Minister David Cameron urging him to review the decision.

But Transport Secretary Philip Hammond has said that it was not possible to review the bidding process. His only option would be to cancel the whole Thameslink project, which was already 16 years behind schedule.

European Parliament

Malcolm Harbour MEP

Euro MEP Malcolm Harbour has expressed his own concerns about the rules for some time. Working with the Information Society Alliance, he has indicated that the average public procurement in the UK takes over 24 months whilst in Germany it takes under 9 months.

The UK public sector commonly pays 30% more for equivalent products and services and that the presence of over 50 public buying bodies are part of the problem too.

The European Commission plans to change the way that public procurement in the EU works, aiming to reform rules so that the process becomes easier and more transparent. It aims to encourage an increase in smaller company participation.

Public procurement spending represents 17% of the EU's GDP. "Putting this 17% to the best possible use is essential for re-launching our economy and creating jobs, even more so in a period of crisis," said a Commission statement. "Stakeholders have voiced demands for a review of the EU public procurement system to streamline its procedures and better adapt them to new challenges."

EU Procurement Regulations

"We need to clarify public procurement rules to make life easier for both public authorities and companies bidding for contracts in Europe," said Internal Market and Services Commissioner Michel Barnier. "Access of smaller companies to procurement markets, reducing red tape, or promoting European cross-border procurement will be under the spotlight during the consultation. My ambition is also to make sure that public procurement can help job creation, innovation, and protection of the environment."

It is apparent that the problem is not the EU procurement directives but the UK implementation. A decade ago, the Commission official then responsible for enforcing the directives memorably begged at a EURIM meeting looking at the EU Directives: "please do not blame us for your English lawyers".